BEIJING (Reuters) - China began an anti-dumping investigation on Monday into stainless steel imports worth $1.3 billion, including from a privately owned Chinese mill with operations offshore, after complaints of damage to the local industry.

FILE PHOTO: An employee works among stainless steel sheets at a steel factory in Taiyuan, Shanxi province, China, September 2, 2015. REUTERS/Stringer/File Photo

The Commerce Ministry said the investigation will target imports of stainless steel billet and hot-rolled stainless steel sheet and plate from the European Union, Japan, South Korea and Indonesia, which nearly tripled last year.

The move follows a complaint by Shanxi Taigang Stainless Steel (000825.SZ), with backing from four other state-owned mills including Baosteel’s stainless steel division, which blamed cheap imports for falling prices, it said.

China makes and consumes around half the world’s stainless steel, which is used to protect against corrosion in buildings, transportation and packaging.

While the complaint targets eight foreign producers, it also lists a number of Chinese companies, including the Indonesian unit of one of the world’s top producers, Tsingshan Stainless Steel, and 19 traders who import product.

Some private Chinese companies have opened or started building plants in Indonesia in recent years, drawing on its plentiful nickel resources and lower cost of production.

A significant portion of the new production has been sold in China, analysts say.

The rapid increase in imports damaged the Chinese market, according to the complaint filed by Shanxi Taigang and released with the commerce ministry document.

Almost two-thirds of China’s stainless imports came from Indonesia last year, up from 5 percent in 2016 and zero in 2015, the complaint said. That rose to as high as 86 percent in the first quarter, it said.

Imported prices of the stainless steel products fell 23 percent to $1,867 a tonne in 2017 from $2,436 a year earlier.

“If we allow these products to continue to enter the Chinese market with low prices and take more market share, sales of China’s domestic products will continue to decrease,” the complaint said.

INDUSTRIAL DISPUTE

Peter Peng, senior consultant at CRU in Beijing, said the investigation was “totally driven by an industrial dispute between SOEs (state-owned enterprises) and the fast-growing private mills”.

“Due to their cheap production costs, it’s more competitive than Chinese products,” he said.

Tsingshan opened a mill in Indonesia last year with annual capacity of 3 million tonnes while Delong Holdings (DELO.SI) plans to start production there next year.

Anti-dumping duties would force mills to find new markets for their product, adding to a global glut, Peng said.

The European companies targeted by the inquiry include Spain’s Acerinox (ACX.MC), Finland’s Outokumpu Oyj (OUT1V.HE) and Luxembourg-based Aperam (APAM.AS).